BOI reveals new facts on middle class

Who is Israel’s middle class, in whose name and rights half a million Israelis went out to the streets last summer? Bank of Israel economists tried to answer that question in a report that is set to be published in the next few weeks.

They found that one fourth of Israel’s
population in the years 2010-2011 belongs to the middle class while another fourth of the states citizens belong to the upper-middle class.

Since 1997 the number of Israelis defined as middle class has decreased and more and more households are now in the lower class. The Central Bank claims that the trend characterizes most developed countries.

The bank also noted that between the years 1997 and 2007 the income of households belonging to the middle class increased at a higher rate then the price increase rate, but since 2007 the trend changed direction and the increase in real estate, rent, food, electricity, gas and water prices has created a realistic drop in the income of middle class Israeli families.

According to Bank of Israel data, in 2010-2011 24.7% of households belonged to the middle class while 25.7% belong to the upper-middle class. 30.2% of households were defined as lower class.

So who belongs to the middle class? Research shows that over 90% of those numbered in the middle class and upper middle class are non-haredi Jews, half are couples with children. An additional 25% are couples without children. Among the households with children, the majority have only one or two children.

The Bank of Israel noted that last summer’s social protests
were pivotal to their decision to examine Israel’s middle class.

“The ongoing increase in the financial and social gaps in Israel, together with the era of economic and political change throughout the world have caused an overflow of discontent with lifestyle of the core of Israel’s society and economy - the middle class,” the report stated.

“Those who are traditionally said to carry the social, financial and security load but who feel that their standard of living and the standard of the services they receive from the State is dropping steadily.”

The report attempted to deal with one of the central claims that were raised in the public debate over the situation of Israel’s middle class - that over the last few years there has been an erosion is the middle class’ income due to the price hikes.

The report’s authors found that since 2007 the average income per household has kept its realistic value relative to the consumer price index, but the prices of products and services at the base of the protest - housing, food, electricity, gas and water increased at a higher rate than that of the income increase rate.